1,4-butanediol is primarily used for the production of polybutylene
terephthalate (PBT), which is an engineering plastic that is further utilized
in the automotive industry for the production of interior and exterior
automotive components, owing to its excellent durability under thermal stress
and harsh chemical environments. Bio-based products are made from renewable
resources that are less toxic to the environment. They cause less pollution by
emitting very less carbon emissions that can be harmful to the environment as
opposed to standard petroleum-based products. Moreover, bio-based products can
be produced from a wide range of materials and also perform very well in most
conditions. Bio-based products are biodegradable and reduce the possibility of
contamination of soil or underground water during its transportation, storage,
or use. Owing to these benefits, the demand for bio-based products including
bio-based 1,4 butanediol is expected to increase in the upcoming years. Bio-Based 1,4-Butanediol market size is forecasted to reach US$288.2 million by 2027, after growing at a CAGR of 7.8% during the forecast period 2022-2027.
In addition to this, fluctuating oil prices are another factor that is likely to drive the demand for bio-based 1,4-butanediol. Some of the raw materials for conventional 1,4 butanediol are obtained from crude oil and natural gas. As a result, fluctuations in the prices of crude oil can cause volatility in the prices of raw materials required for the production of conventional 1,4-butanediol. For instance, in 2020, the international benchmark for petroleum prices across the world also known as Brent crude prices decreased to US$ 9.12 per barrel, which was the lowest record since December 10, 1998. In April 2020, India’s Crude Oil Basket (COB) reached US$ 19.90 per barrel, which was the lowest record since February 2002. During the first 11 months of the year 2020-21, the average annual price of India’s COB was around US$ 42.72 per barrel, which decreased by 30% more than the average COB price in 2019-20. Furthermore, as per revised estimates for 2020-21, the COB has increased by around 35% from its initial budget estimate. In this way, the uncertainty regarding the price of crude oil also increases the price of raw materials required for the production of conventional 1,4-butanediol. Hence, such instability and fluctuating prices of petroleum-based raw materials are expected to increase the demand for bio-based 1,4 butanediol derived from renewable resources such as sugar, cellulosic feedstock, and more. This is anticipated to create an opportunity for the growth of the market during the forecast period.
Bio-based 1,4-butanediol polymers are used in interior and exterior parts of passenger vehicles such as mirror housings, connectors, and fuse boxes as the polymer such as polybutylene terephthalate, is lightweight and provides good durability in the harsh chemical environment. Moreover, bio-based 1,4-butanediol is used in spoilers of passenger vehicles. The growing demand for passenger vehicles on account of the growing income level of the middle-class segment will create more demand for bio-based 1,4-butanediol in this automotive segment. For instance, according to the International Organization of Automotive Manufacturers, in 2021, global passenger vehicle production was 57 million units showing a 2% increase in comparison with the 2020 production volume. According to the International Organization of Motor Vehicle Manufacturers, in 2021, global light commercial vehicles production stood at 18.6 million units showing 8% in comparison with 17.2 million produced in 2020 global. According to the International organization of Motor Vehicle Manufacturers, in 2021, heavy truck production in North America stood at 6.22 million units showing a 30% increase in comparison to 4.79 million units produced in 2020. The increase in passenger vehicle production will create more usage of bio-based 1,4-butanediol-based polymers in the interiors and exteriors of passenger vehicles.
The COVID-19 outbreak led to major economic problems and challenges for the automotive, electronics, textile, and other industrial sectors across the world. According to the World Bank, the global GDP growth declined by 3.6% in 2020, owing to the economic impact of COVID-19. The government of various countries across the world announced strict measures to slow the spread of the coronavirus and only the production of essential commodities was allowed, which impacted the non-essential commodity industries, thereby impacting the production of bio-based 1,4-butanediol as well. Moreover, strict lockdown measures, social distancing norms, and supply chain disruption caused delays in the production of bio-based 1,4-butanediol, which in turn, impacted the bio-based 1,4-butanediol market growth. Furthermore, in the year 2020, several development projects for automotive, electronics, textile and other industrial sectors and facilities were delayed, and manufacturers were experiencing short-term operating challenges due to supply chain disruptions and a lack of site access due to pandemic-induced limitations. However, economic stimulus packages allotted for multiple sectors and the start of industrial production activities in 2021 are improving the bio-based 1,4-butanediol market growth by its increasing utilization in various end-users. In the long run, the industry will recover the losses induced by the COVID-19 pandemic. For instance, to strengthen the economy, governments all across the world encouraged industrial manufacturing to foster economic growth, as a result of which the global GDP grew by 5.9% in 2021.
In addition to this, the war between Russia and Ukraine is creating a negative impact on the industrial production of various sectors such as automotive, electronics, textile, and other industrial sectors in countries like Russia, Ukraine, Germany, France, and other European countries, owing to the decline in the supply of materials from both the countries and major industries due to a halt in their production activities. The ongoing conflict between Russia and Ukraine has caused a huge impact on European car manufacturing, in particular, owing to the risk associated with the current global supply chain. For example, Volkswagen and BMW have closed assembly lines in Germany due to the shortage of wiring harnesses manufactured in Ukraine by the German company Leoni. Likewise, Porsche also announced the temporary suspension of its production of the Taycan electric vehicle at its Stuttgart-Zuffenhausen facility in Germany due to the component shortage caused by the Russia-Ukraine War. Likewise, the Russia-Ukraine conflict is expected to cause additional disruptions and affect the supply chains of semiconductors. The semiconductor chip shortage has impacted many industries worldwide with automotive & electronics industries among the most affected sectors. Therefore, such disruptions in the supply chain and production activities across multiple industries, owing to the ongoing Russia and Ukraine war are expected to hinder the growth of the market due to a halt in industrial production in countries like Russia, Ukraine, and other countries.
Asia-Pacific held the largest share in the bio-based 1,4 butanediol market, owing to the increasing end-use industries, which are accelerating the demand for bio-based 1,4 butanediol in the region. The development in the key constructions like the residential and commercial buildings is driving the demand for gamma-Butyrolactone (GBL) which is further driving the market for bio-based 1,4 butanediol. For instance, the Hamamatsucho Shibaura 1 Chrome Redevelopment construction project of two 232.55-meter tall buildings is expected to be completed in the fourth quarter of 2030. According to Statistics of Japan, the number of construction contract orders has witnessed growth in 2021 (Jan-July) compared to 2020(Jan-July). It went from 6,00,46,960 units in 2020 to 6,36,10,223 in 2021. Thus, the rise in the construction activity will eventually drive the demand for bio-based 1,4 butanediol. According to the International Trade Administration (ITA), in Australia, the investment in the total local production of aerospace’s electric grid, aircraft, weapons, and other systems increased to an estimated US$ 8.4 million, from US$ 8.15 million in 2020. Also, the total local production of medical devices in Australia rose from US$1,495 million in 2020 to an estimated US$1,539 million in 2021. The market size is forecasted to grow in 2021 as compared to the previous year. Thus, driving the market growth. According to the Organisation Internationale des Constructeurs d'Automobiles (OICA), the total automobile production in India reached 43,99,112 units in 2021, an incline of 30% from 33,94,446 units in 2020. Furthermore, in October 2021, Godawari E-mobility Ltd. commenced the development of an electric vehicle plant in Raipur to increase the production of electric vehicles in the country. The development of the new facility is scheduled to be completed by 2023. Thus, such surging automobile production is expected to increase the demand for bio-based 1,4 butanediol for the production of automotive parts for use in automobile engines, batteries, belts, radiators, and more. This is expected to accelerate the market growth in India during the forecast period. Thus, owing to the flourishing end-use industries, the bio-based 1,4 butanediol market is flourishing in Asia-Pacific.
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Bio-based 1,4 butanediol Market Growth Drivers:
Increasing Automobile Production:
Bio-based 1,4 butanediol is a primary material used in the production of polybutylene terephthalate (PBT), which is an engineering plastic that is further utilized in the production of interior and exterior automotive components, owing to its excellent durability under thermal stress and harsh chemical environments. PBT is mainly used in the automobile for weight reduction, energy absorption, and shock absorption for bumpers. It also restricts the risk of explosion in fuel tanks and is used in airbags, seat belts, door, and seat assemblies, along with subsystems, bumpers, exterior trim, and various other components of the automobile. The factors such as increasing disposable income, the rapid pace of industrialization, and other similar factors are accelerating the demand for automobiles, which in turn, is driving the production of the automobile. For instance, according to the International Organization of Motor Vehicle Manufacturers (OICA), the total global automobile production reached 80.2 billion units in 2021, an increase of 3% as compared to 77.7 billion units in 2020. Further, it states that the total automobile production in 2021 in Europe, America, Asia, and Africa increased by 25%, 17%, 28%, and 37% respectively in comparison to 2020. In October 2021, Godawari E-mobility Ltd. commenced the development of an electric vehicle plant in Raipur, India to increase the production of electric vehicles in the country. The development of the new facility is scheduled to be completed by 2023. In 2021, Ford invested US$ 11 billion to develop new electric vehicle facilities in Tennessee and Kentucky to increase its electric vehicle production. The development of the new facilities is scheduled to be completed by 2025. In this way, an increase in automobile production in multiple regions across the world is expected to increase the demand for bio-based 1,4-butanediol for the production of polybutylene terephthalate (PBT), utilized in the industry, owing to its above-mentioned benefits. This is expected to drive the growth of the market during the forecast period.
The Major Players in this Market Include
The major companies in the bio-based 1,4 butanediol market include BASF SE, Novamont, Shandong Land Biological Technology Co. Ltd., and others.
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